A very important tipping point was reached last week when the IEA decided to release 60mb of oil to replace Libyan oil production taken off of the market due to their civil war. After OPEC and in particular SA refused to increase production to make up for the loss of the Libyan oil, the IEA stepped in. This was an important shift. It effectively means the IEA is now the world's swing oil producer and will have to intervene to calm oil price moves, not just pump oil in case of strategic emergencies, which was the original purpose of the IEA reserves of oil. After a decade of rising oil prices, rising more than 10 fold sense 1999, and after repeated pledges by SA to increase production to stabilize world oil prices, it was apparent they can't and couldn't. SA produces less oil today in 2011 than it did in 2005. SA is no longer the swing producer. No one believes that anymore. That role has now shifted to the IEA What that means from here on out, who knows. But, it is an important tipping point politically, economically, and in the debate about PO.

Last edited by seahorse3 on Sun 26 Jun 2011, 13:25:34, edited 1 time in total.

The strategic "reserves" of the 28-country IEA (International Energy Agency) are nothing more than a drop in the bucket, various temporary storages (old salt mines, empty petroleum reservoirs, etc. in the USA) amounting to several weeks of world petroleum consumption. It does not represent real reserves and so is not a replacement for declining world oil stocks. In the past these cavities would have been refilled soon after they were drawn down. Not likely this time.

Given that Seahorse, I think you basic assumption may well be correct. This drawdown could the signal that peak oil decline has been recognized by the world's leaders and they are trying to cover their butts while SA comes up with another excuse why it is not longer capable of increasing production. When this gimmick fails then I am afraid that SA might have to create a Terrorist Attack to divert attention from its failure. I hope it doesn't occur on this continent.

The truth is apparent that there is no swing producer anymore Just decline.

seahorse3 wrote:A very important tipping point was reached last week when the IEA decided to release 60mb of oil to replace Libyan oil production taken off of the market due to their civil war. After OPEC and in particular SA refused to increase production to make up for the loss of the Libyan oil, the IEA stepped in. This was an important shift. It effectively means the IEA is now the world's swing oil producer and will have to intervene to calm oil price moves, not just pump oil in case of strategic emergencies, which was the original purpose of the IEA reserves of oil.

IEA doesn't produce anything, so they certainly can't be a swing producer. All they can do is shuffle inventories, and backhand the occasional speculator, who gets REAL pissed when bigger players get involved and screwup their long/short positions.

seahorse3 wrote:After a decade of rising oil prices, rising more than 10 fold sense 1999, and after repeated pledges by SA to increase production to stabilize world oil prices, it was apparent they can't and couldn't. SA produces less oil today in 2011 than it did in 2005. SA is no longer the swing producer. No one believes that anymore. That role has now shifted to the IEA What that means from here on out, who knows. But, it is an important tipping point politically, economically, and in the debate about PO.

PO isn't a debate, it is one of those things which showed up one afternoon, pissed in the punch bowl, and now we are dealing with it. The Saudi's aren't producing any more oil now than they did in the late-1970's, certainly this can't be considered a surprise to anyone except those who already believed their incessant claims that they can pump "at full capacity" when that horse has long since gotten up and disappeared. And anyone that stupid shouldn't be left in the debate anymore. No, no real tipping point, just the same horse manure people have been shoveling since the last time there was an energy crisis.

pstarr wrote:The truth is apparent that there is no swing producer anymore Just decline.

At least we have some good news...

Why is that good news?

No one solves a problem until it is actually a problem. Peak oil is finally going to give Americans a decent sized problem to solve. What cheeses me off about it is that someone is going to get Bill Gates rich in this deal, and it will help out the country so much it will probably be worth it, another robber baron in the mix.

... However it will take time for these incremental barrels to be produced and shipped to consuming markets; the use of IEA strategic stocks now will help bridge the gap until these new supplies are available.

... The use of IEA strategic stocks now will help bridge the gap until these new supplies are available.

See, it's all about bridging the gap, nothing to worry about--we'll be safely on the other side when the good old OPEC oil arrives.

Of course the IEA isn't a "producer". I didn't mean that literally. Just noting that this is the "admission" that SA isn't the swing producer everyone thought. And, everyone on this board knows that SA produced more oil in 1980 than ever, but the world at large has a short memory; and this was a first for the IEA to step in and try to defend cheap oil.

... the IEA warmly welcomes the announced intentions to increase production by major oil producing countries. As these production increases will inevitably take time and world economies are still recovering, the threat of a serious market tightening, particularly for some grades of oil, poses an immediate requirement for additional oil or products to be made available to the market. The IEA collective action is intended to complement expected increases in output by these producing countries, to help bridge the gap until sufficient additional oil from them reaches global markets. ...

See, nothing worry about? Warm welcomes will bring home the bacon and we can just bridge the gap.

seahorse3 wrote:Of course the IEA isn't a "producer". I didn't mean that literally. Just noting that this is the "admission" that SA isn't the swing producer everyone thought.

That may not be the admission at all. Saudi Arabia may pay lipservice to the "we want $80-$90 oil prices" but they certainly aren't hurt by the $110-$130 price and will laugh all the way to the bank, profiting by piggybacking on the speculators. They must think the recent price runup is nothing but a wonderful free lunch worth billions in additional profit.

seahorse3 wrote:And, everyone on this board knows that SA produced more oil in 1980 than ever, but the world at large has a short memory; and this was a first for the IEA to step in and try to defend cheap oil.

I don't think everyone on this board knows everything related to SA oil production, but I agree that the world has a short memory. And this wasn't a first for IEA releasing oil because of a perceived shortage, they have done it during other wars/police actions/conflicts as well.

Certainly the IEA can't be so stupid to think that a drop in the bucket like 60 million barrels can change anything related to the underlying dynamics of oil supply and demand.

ALKHOBAR: Saudi Aramco will study drilling again at its long mothballed, first oilfield, industry sources said.

Dammam, now known as the “Prosperity Well,” is where the top crude exporter has made its first discovery in 1938.

Saudi Aramco’s chief executive Khalid Al-Falih has said the Number 7 well there produced 32 million barrels of oil before it was shut. The kingdom’s oldest field, Ghawar, has pumped more than 65 billion barrels since 1951.

“The well remains capable of producing even today, and the Dammam Field as a whole still accounts for half-a billion barrels of our proven reserves,” Al-Falih said.

Saudi Aramco looks at restarting its first ever oilfieldReuters / May 24, 2011ALKHOBAR: Saudi Aramco will study drilling again at its long mothballed, first oilfield, industry sources said. ..“There is a plan to drill trial wells, to try to assess the feasibility of the extended reach target,” one source said.“It is challenging to drill an extended reach well.” ...

You appear to be verifying my comment by cutting and pasting "internet" knowledge on an unrelated topic to the thread?

The topic appears to be if IEA is a swing producer or not. Saudi Arabia is one of the few countries left in the world with surplus capacity, and would otherwise play that role themselves. And either can't, or won't. So the IEA decided to screw with somebody, OPEC, consumers, Russia, big oil producers in general. Certainly we know that IEA isn't a producer of anything except poor future forecasts over the years.